Apple has been creating a closed software ecosystem with proprietary payment methods for years, but the terms of joining it have begun to make many partners nervous, so now the US tech giant is aggressively fighting them in court for the right to maintain high commission rates. Meanwhile, Apple itself has admitted in its appeal to regulators that such activity could ultimately lead to a severe decline in core revenue.
Image source: Apple
Apple’s services revenue exceeds $30 billion per quarter, but its value and profit margins have fallen below market expectations. In recent documents sent to U.S. regulators, Apple has generally cited the risk of losing the ability to make money from customers’ financial transactions through alternative payment systems.
Cited Sensor Tower Research Data financial timesThey said that while customer spending in the ecosystem grew 9% a year ago, App Store revenue fell 6% in the second quarter. Appfigures estimates that Apple’s U.S. fee revenue is down 18% so far this year. Apple’s report directly pointed out that the service department’s profit at the end of last quarter was nearly US$31 billion, a 12.1% increase over the same period last year, but still lower than UBS analysts’ expectations. Apple’s profit margin in this area is a respectable 75.6%, but this number also disappointed analysts.
Now the judicial systems of multiple countries and regions are working hard to force Apple to refuse to charge commissions of up to 30% of the payment amount when proceeding within the proprietary ecosystem. Even if a court forces it to give customers the right to pay through alternative systems and add its own commission on those transactions, the company will resist. Regulators have also sought to challenge the practice. Sensor Tower data shows that global consumer spending on the App Store grew only 3% in the second quarter, compared with 13% growth in the same period last year. This dynamic, in addition to audiences’ willingness to pay to bypass brand ecosystems, is also affected by a deteriorating macroeconomic environment. Appfigures said Apple’s core revenue in Brazil and Japan began to decline after the introduction of new payment requirements. In the EU, South Korea and Brazil, authorities have forced Apple to offer customers the ability to pay through alternative channels; in the UK and Australia, litigation on the subject is ongoing.
In the United States, the Supreme Court had to review Apple’s dispute with Epic Games after considering a previous lawsuit and finding that Apple had failed to meet the plaintiff’s previous demands. Last year, the EU fined Apple 500 million euros for violating the Digital Market Act. In this case, all of these enforcement actions naturally start to affect Apple’s confidence in its ability to continue to earn the same amount of commissions.
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